The campaign, which ran with the headline "Why Virgin TV is better than Sky TV by ex-Sky customers", included testimonials that were highly critical of BSkyB's customer service and interrupted picture quality. The direct mail ads also claimed that Virgin offers high-definition channels for free, while Sky charges £10 extra a month, and that Virgin has free set-up while Sky charges about £60.

BSkyB said the campaign was misleading and denigrating. The company added that the Virgin ad was misleading over set-up prices because the comparison was with its own special offer and BSkyB's standard set-up price.

The satellite broadcaster also complained that the Virgin ad was misleading in not admitting that it had "significantly fewer" HD channels to offer customers.

In its ruling the ASA said that the criticisms and the claim "Why Virgin TV is better than Sky" went "beyond a comparison of the services being offered by the two companies" and concluded that the comments were denigratory and likely to mislead consumers.

The ASA also backed Sky's complaint about HD channels. The ad watchdog said that because Sky offered 18 HD channels through its basic service, compared with Virgin Media's 12, it was misleading to compare the difference in charges.

It also agreed with Sky that the set-up cost claim made by Virgin was misleading as the satellite operator was also running a free set-up special at the time.

• To contact the MediaGuardian news desk email editor@mediaguardian.co.uk or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000.

• If you are writing a comment for publication, please mark clearly "for publication".